During the German military rearmament of the 1930s, the Army began to take on stocks of armored vehicles to conform to its evolving mechanized plans. However, these proved less than ideal for heavy-duty military service for they were built upon commercial Adler and Daimler-Benz automobile chassis, largely unsuitable for the rigors of warfare. Subsequently, a dedicated armored car chassis was selected which then begat the line of successful SdKfz 221 armored cars seeing extensive use during World War 2 (1939-1945). The vehicle was also known as the Leichter Panzerspahwagen for "Light Armored Reconnaissance Vehicle".

Two preproduction vehicles were constructed by Eisenwerke Weserhutte AG and these pilot vehicles differentiated from their production-quality forms by a slightly raised roof line identified over the driver's compartment and ahead of the machine gun emplacement. Serial production included Maschinenfabrik Niedersachsen (Hannover) and F. Schichau and spanned from 1935 into 1944. Vehicles produced from 1935 into 1940 lacked radio sets so those introduced early 1941 onwards included radios as standard fittings.

The end-product became a 4.4-ton, light-class vehicle featuring 4x4 wheel drive capability. Power was served through a Horch 801 series V8, liquid-cooled, gasoline-fueled engine of 75 horsepower giving the vehicle, and its crew of two (commander/gunner and driver), a road speed of 50 miles per hour with an operational range out to 185 miles. The armored hull sat atop a suspended chassis which, coupled with the Horch engine, provided the necessary power and performance for off-road service. Four large road wheels were well-spaced apart, held at the extreme corners of the design, for the necessary balance and traction on road or off.

All faces of the armored superstructure were well-sloped to offer basic ballistics protection for the crew. Vision slots aided in situational awareness while an open-topped gun emplacement was affixed along the center hull roof. The gun emplacement was manually-traversed and provided the gunner with a simple ballistics shield. The gunner's position was also afforded folding panels which could be erected to prevent infantry grenades from being dropped into the fighting compartment. Early vehicle models sported a single MG13 series machine gun but, as the MG34 began its widespread circulation and standardization, it was adopted as the primary weapon aboard most SdKfz 221 series cars with about 1,000 rounds of 7.92mm ammunition carried. In early 1942, many of the cars were up-gunned to carry a single 20mm cannon/anti-tank gun (sPzB 41 series) to contend with ever-growing threats on the battlefield. While this improved firepower considerably, the vehicle itself was still only ever protected in its base armor - which shielded the crew from small arms fire up to 7.92mm in caliber. Armor thickness ranged from 5mm to 14.5mm thickness.

Production of SdKfz 221 series cars totaled about 339 units. The related SdKfz 222 introduced the 20mm KwK 30 series autocannon along with a 7.92mm machine gun and an additional crewmember to serve as dedicated gunner. 990 of this series were produced. The SdKfz 223 continued the line started with the SdKfz 221 cars and these were identified by their collapsible antenna frames and machine gun-only armament (again with crew of three). Production of this variant numbered about 567 vehicles.

SfKfz 260 and SdKfz 261 vehicles were also related and were developed with a long range radio set and collapsible antenna frame. Production netted 483 total cars of both marks.